IBM University Programs World Wide (IBM UP) Service Science Progress & Directions Working Together to Build a Smarter Planet Dr. James (“Jim”) C. Spohrer spohrer@us.ibm.com Director, IBM University Programs World Wide ICSOC (Service-Oriented Computing) 2010 San Francisco, December 8, 2010 © 2010 IBM Corporation ICSOC 2010 2 IBM UP (University Programs) WW © 2010 IBM Corporation Outline Stimulus: Service Growth – – The World IBM – – Cambridge University Report Arizona State University Report – – – Service Dominant Logic (Vargo & Lusch) Service Science (Spohrer & Maglio) Service Network Theory (Gummesson) Response: Service Science Priorities World View: Networks of Entities Interacting Evolution: Service Science for a Smarter Planet – – – – – – – – – 3 What is Smarter Planet? What improves Quality-of-Life? What is a Service System? Service Science? How to visualize Service Science? What’s the Skills Goal? Where are the Opportunities? Where is the “Real Science” in Service Science? What are Holistic Service Systems? Why are they so important for accelerating innovation? IBM UP (University Programs) WW © 2010 IBM Corporation Service Growth: The World World’s Large Labor Forces US shift to service jobs A = Agriculture, G = Goods, S = Service 2010 2010 Nation Labor % WW A % G % S % 40yr Service Growth China 25.7 49 22 29 142% India 14.4 60 17 23 35% U.S. 5.1 1 23 76 23% Indonesia 3.5 45 16 39 34% Brazil 3.0 20 14 66 61% Russia 2.4 10 21 69 64% Japan 2.2 5 28 67 45% Nigeria 1.6 70 10 20 19% Bangladesh 2.1 63 11 26 37% Germany 1.4 3 33 64 42% (A) Agriculture: Value from harvesting nature (G) Goods: Value from making products (S) Service: Value from IT augmented workers in smarter systems that create benefits for customers and sustainably improve quality of life. CIA Handbook, International Labor Organization Note: Pakistan, Vietnam, and Mexico now larger LF than Germany 4 IBM UP (University Programs) WW © 2010 IBM Corporation Service Growth: IBM Revenue Growth by Segment Revenue ($B) 100 80 Services Software Systems Financing 60 40 20 19 82 19 88 19 94 19 98 20 04 20 06 20 07 20 08 20 09 0 Year What do IBM Service Professionals Do? Run things on behalf of customers, help Transform customers to adopt best practices, and Innovate with customers. B2B Service Projects: IT (data center, call centers) & business process outsourcing/reengineering, systems integration, organizational change, etc. 5 IBM UP (University Programs) WW © 2010 IBM Corporation Priorities: Succeeding through Service Innovation - A Framework for Progress (http://www.ifm.eng.cam.ac.uk/ssme/) Source: Workshop and Global Survey of Service Research Leaders (IfM & IBM 2008) 1. Emerging demand 2. Define the domain 3. Vision and gaps IBM University Programs World Wide (IBM UP) 4. Bridge the gaps 5. Call for actions The white paper offers a starting point to - Service Innovation Service Systems Service Science Stakeholder Priorities Growth in service GDP and jobs Customer-provider interactions that enable value cocreation To discover the underlying principles of complex service systems Education Systematically create, scale and improve systems Knowledge & Tools Service quality & productivity Environmental friendly & sustainable Urbanisation & aging population Globalisation & technology drivers Opportunities for businesses, governments and individuals Dynamic configurations of resources: people, technologies, organisations and information Increasing scale, complexity and connectedness of service systems B2B, B2C, C2C, B2G, G2C, G2G service networks Foundations laid by existing disciplines Progress in academic studies and practical tools Skills & Mindset Develop programmes & qualifications Research Encourage an interdisciplinary approach Business Employment & Collaboration Government Policies & Investment Develop and improve service innovation roadmaps, leading to a doubling of investment in service education and research by 2015 Gaps in knowledge and skills Glossary of definitions, history and outlook of service research, global trends, and ongoing debate © 2010 IBM Corporation Priorities: Research Framework for the Science of Service Pervasive Force: Leveraging Technology to Advance Service Strategy Priorities Development Priorities Execution Priorities Fostering Service Infusion and Growth Stimulating Service Innovation Effectively Branding and Selling Services Improving Well-Being through Transformative Service Enhancing Service Design Enhancing the Service Experience through Cocreation Creating and Maintaining a Service Culture Optimizing Service Networks and Value Chains Measuring and Optimizing the Value of Service Source: Global Survey of Service Research Leaders (Ostrom et al 2010) 7 IBM UP (University Programs) WW © 2010 IBM Corporation Service-Dominant Logic (Vargo & Lusch) Service is the application of competences for the benefit of another entity Service is exchanged for service Value is always cocreated Goods are appliances for delivery Resource Integrator/ Beneficiary (“Firm”) Resource Integrator/ Beneficiary (“Customer”) All economies are service economies All businesses are service businesses 8 IBM UP (University Programs) WW © 2010 IBM Corporation Service Science (Spohrer & Maglio) Service system entities dynamically configure (transform) four types of resources Service system entities calculate value from multiple stakeholder perspectives Service system entities reconfigure access rights to resources by mutually agreed to value propositions 9 IBM UP (University Programs) WW Nation State/Province City/Region Educational Institution Healthcare Institution Family (household) Other Enterprises (job roles) Person (professional) © 2010 IBM Corporation Service Network Theory (Gummesson) F SSE e.g., Citibank F F Service Business Product Business B B e.g., IBM Back-Stage Operations/Provider Focus 10 B F SSE B “Everybody is in service... Something is wrong… The industrial world has changed faster than our taxonomies.”. Based on Levitt, T (1972) Production-line approach to service. HBR. Front-Stage Marketing/Customer Focus IBM UP (University Programs) WW F SSE B F F SSE Service B System Entity B F SSE B F F SSE B Product-Service-System F SSE F SSE B B B F SSE B F SSE B © 2010 IBM Corporation Evolution: Service Science for a Smarter Planet What is Smarter Planet? Harmonized smarter systems. INSTRUMENTED INTERCONNECTED INTELLIGENT We now have the ability to measure, sense and see the exact condition of practically everything. People, systems and objects can communicate and interact with each other in entirely new ways. We can respond to changes quickly and accurately, and get better results by predicting and optimizing for future events. IT MANUFACTURING WORKFORCE 11 SUPPLY CHAIN IBM UP (University Programs) WW CUSTOMERS TRANSPORTATION FACILITIES © 2010 IBM Corporation Our planet is a complex system-of-systems Our planet is a complex, dynamic, highly interconnected $54 Trillion system-of-systems (OECD-based analysis) This chart shows ‘systems‘ (not ‘industries‘) Communication Transportation $ 3.96 Tn $ 6.95 Tn Education $ 1.36 Tn Water $ 0.13 Tn Electricity Leisure / Recreation / Clothing $ 2.94 Tn $ 7.80 Tn Global system-of-systems $54 Trillion (100% of WW 2008 GDP) Healthcare $ 4.27 Tn Infrastructure Legend for system inputs $ 12.54 Tn Note: 1. Size of bubbles represents systems’ economic values 2. Arrows represent the strength of systems’ interaction Source: IBV analysis based on OECD 12 Finance $ 4.58 Tn IBM UP (University Programs) WW Food $ 4.89 Tn Govt. & Safety $ 5.21 Tn 1 Tn Same Industry Business Support IT Systems Energy Resources Machinery Materials Trade © 2010 IBM Corporation We now have the capabilities to manage a system-of-systems planet Economists estimate, that all systems carry inefficiencies of up to $15 Tn, of which $4 Tn could be eliminated This chart shows ‘systems‘ (not ‘industries‘) Analysis of inefficiencies in the planet‘s system-of-systems Improvement potential as % of system inefficiency 40% 35% Electricity 2,940 30% Building & Transport 34% Infrastructure Education 12,540 1,360 Financial 4,580 System-ofsystems 42% Inefficiencies Food & Water 4,890 25% 20% Communication 3,960 Transportation (Goods & Passenger) 6,950 Leisure / Recreation / Clothing 7,800 15% 15% 20% 25% Improvement potential Government & Safety 5,210 $54 Trillion 100% of WW 2008 GDP $15 Trillion 28% of WW 2008 GDP $4 Trillion 7% of WW 2008 GDP Note: Size of the bubble indicate absolute value of the system in USD Billions 30% 35% 40% System inefficiency as % of total economic value Source: IBM economists survey 2009; n= 480 13 Global economic value of Healthcare 4,270 IBM UP (University Programs) WW 45% How to read the chart: For example, the Healthcare system‘s value is $4,270B. It carries an estimated inefficiency of 42%. From that level of 42% inefficiency, economists estimate that ~34% can be eliminated (= 34% x 42%). © 2010 IBM Corporation What improves Quality-of-Life? Service System Innovations A. Systems that focus on flow of things that humans need (~15%*) * = US Labor % in 2009. 20/10/10 1. Transportation & supply chain 2/7/4 2. Water & waste recycling/Climate & Environment 2/1/1 3. Food & products manufacturing 7/6/1 4. Energy & electricity grid/Clean Tech 1/1/0 5. Information and Communication Technologies (ICT access)5/17/27 B. Systems that focus on human activity and development (~70%*) 6. Buildings & construction (smart spaces) (5%*)1/0/2 7. Retail & hospitality/Media & entertainment/Tourism & sports (23%*) 24/24/1 8. Banking & finance/Business & consulting (wealthy) (21%*) 2/20/24 9. Healthcare & family life (healthy) (10%*)7/10/3 10. Education & work life/Professions & entrepreneurship (wise) (9%*)5/2/2 C. Systems that focus on human governance - security and opportunity (~15%*) 11. Cities & security for families and professionals (property tax)3/3/1 12. States/regions & commercial development opportunities/investments (sales tax) 0/0/0 13. Nations/NGOs & citizens rights/rules/incentives/policies/laws (income tax) 1/2/2 0/19/0 Quality of Life = Quality of Service + Quality of Jobs + Quality of Investment-Opportunities “61 Service Design 2010 (Japan) / 75 Service Marketing 2010 (Portugal)/78 Service-Oriented Computing 2010 (US)” 14 IBM UP (University Programs) WW © 2010 IBM Corporation NAE’s Engineering Grand Challenges A. Systems that focus on flow of things humans need 1. Transportation & Supply Chain Restore and enhance urban infrastructure 2. Water & Waste/Climate & Green tech Provide access to clear water 3. Food & Products Manager nitrogen cycle 4. Energy & Electricity Make solar energy economical Provide energy from fusion Develop carbon sequestration methods 5. Information & Communication Technology Enhance virtual reality Secure cyberspace Reverse engineer the brain B. Systems that focus on human activity & development 6. Buildings & Construction (smart spaces) Restore and enhance urban infrastructure 7. Retail & Hospitality/Media & Entertainment (tourism) Enhance virtual reality 8. Banking & Finance/Business & Consulting 9. Healthcare & Family Life Advance health informatics Engineer better medicines Reverse engineer the brain 10. Education & Work Life/Jobs & Entrepreneurship Advance personalized learning Engineer the tools of scientific discovery C. Systems that focus on human governance 11. City & Security Restore and improve urban infrastructure Secure cyberspace Prevent nuclear terror 12. State/Region & Development 13. Nation & Rights 15 IBM UP (University Programs) WW © 2010 IBM Corporation What is a Service System? What is Service Science? …customers just name <your favorite provider> …researchers just name <your favorite discipline> Design/ Cognitive Science “service science is the interdisciplinary study of service systems & value-cocreation” Marketing “a service system is a human-made system to improve customer-provider interactions, or value-cocreation between stakeholders” Computer Science/ Artificial Intelligence 16 Systems Engineering IBM UP (University Programs) WW Economics & Law Operations © 2010 IBM Corporation How to visualize service science? The Systems-Disciplines Matrix systems disciplines Customer Systems that focus on flows of things transportation & ICT & food & energy supply chain water & cloud products & electricity waste Systems that support people’s activities Systems that govern retail & healthcare education city state nation building & hospitality banking & family secure scale laws &work construction & finance behavioral sciences stakeholders e.g., marketing Provider management sciences e.g., operations Authority Competitors People Starting Point 1: The Stackholders (As-Is) political sciences e.g., public policy learning sciences e.g., game theory and strategy cognitive sciences e.g., psychology resources Technology system sciences e.g., industrial eng. information sciences Starting Point 2: Their Resources (As-Is) Information e.g., computer sci organization sciences Organizations change History (Data Analytics) Future (Roadmap) Run value Transform (Copy) Innovate (Invent) e.g., knowledge mgmt social sciences e.g., econ & law decision sciences e.g., stats & design Change Potential: Thinking (Has-Been & Might-Become) run professions e.g., knowledge worker transform professions e.g., consultant Value Realization: Doing (To-Be) innovate professions e.g., entrepreneur 17 IBM UP (University Programs) WW © 2010 IBM Corporation What is the skills goal? T-Shaped professionals, ready for T-eamwork! Many team-oriented service projects completed (resume: outcomes, accomplishments & awards) Many disciplines Many systems (understanding & communications) (understanding & communications) Deep in one system (analytic thinking & problem solving) Deep in one discipline (analytic thinking & problem solving) SSME+D = Service Science, Management, Engineering + Design 18 IBM UP (University Programs) WW © 2010 IBM Corporation Where are the opportunities? Everywhere! 19 IBM UP (University Programs) WW © 2010 IBM Corporation 14B Big Bang Where is the “Real Science” in Service Science? In the sciences of the natural and human-made worlds… Evolving hierarchical-complexity of populations of things (Natural World) Time 10K Cities (Human-Made World) writing (symbols and scribes) written laws ECOLOGY money (coins) Sun Earth bacteria (uni-cell life) bees (social division-of-labor) sponges (multi-cell life) transistor universities 20 clams (neurons) tribolites (brains) 200M 60 printing press (books steam engine Service System Ecology: Conceptual Framework Ecology (Populations & Diversity) Entities (Service Systems) Identity (Aspirations/Lifecycle) Interactions (Service Networks) Value Proposition Governance Mechanism (Offers/Risks/Incentives) (Rules/Constraints/Penalties) Access Rights (Relationships) Resources (Roles in Processes) 21 Outcomes (Value Changes) Reputation (Opportunities/Variety) Measures (Rankings of Entities) Stakeholders (Valuation Perspectives) lose-win win-win lose-lose win-lose Resources: People, Technology, Information, Organizations Stakeholders: Customers, Providers, Authorities, Competitors Measures: Quality, Productivity, Compliance, Sustainable Innovation Access Rights: Own, Lease, Shared, Privileged IBM UP (University Programs) WW © 2010 IBM Corporation Holistic Service Systems Examples: Nations, States, Cities, Universities, Luxury Hotels, Cruise Ships, Households Subsystems: Transportation, Water, Food, Energy, Communications, Buildings, Retail, Finance, Health, Education, Governance, etc. Definition: A service system that can support its primary populations, independent of all external service systems, for some period of time, longer than a month if necessary, and in some cases, indefinitely Nation State/Province City/Region University Luxury Resort Hotels Hospital Family (household) Person (professional) Balance independence with interdependence, without becoming overly dependent 22 IBM UP (University Programs) WW © 2010 IBM Corporation Cities as Holistic Service Systems: All the systems A. Flow of things 1. Transportation: Traffic congestion; accidents and injury 2. Water: Access to clean water; waste disposal costs 3. Food: Safety of food supply; toxins in toys, products, etc. 4. Energy: Energy shortage, pollution 5. Information: Equitable access to info and comm resources B. Human activity & development 6. Buildings: Inefficient buildings, environmental stress (noise, etc.) 7. Retail: Access to recreational resources 8. Banking: Boom and bust business cycles, investment bubbles 9. Healthcare: Pandemic threats; cost of healthcare 10. Education: High school drop out rate; cost of education Example: Singapore C. Governing 11. Cities: Security and tax burden 12. States: Infrastructure maintenance and tax burden 13. Nations: Justice system overburdened and tax burden 23 IBM University Programs (IBM UP) WW © 2010 IBM Corporation Universities as Holistic Service Systems: All the systems A. Flow of things 1. Transportation: Traffic congestion; parking shortages. 2. Water: Access costs; reduce waste 3. Food: Safety; reduce waste. 4. Energy: Access costs; reduce waste 5. Information: Cost of keeping up best practices. B. Human activity & development 6. Buildings: Housing shortages; Inefficient buildings 7. Retail: Access and boundaries. Marketing. 8. Banking: Endowment growth; Cost controls 9. Healthcare: Pandemic threat. Operations. 10. Education: Cost of keeping up best practices.. C. Governing 11. Cities: Town & gown relationship. 12. States: Development partnerships.. 13. Nations: Compliance and alignment. 24 IBM UP (University Programs) WW © 2010 IBM Corporation Luxury Hotels as Holistic Service Systems: All the systems http://www.youtube.com/watch?v=Hm7MeZlS5fo 25 IBM UP (University Programs) WW © 2010 IBM Corporation Why Universities Matter: % GDP and % Top 500 9 Japan 8 y = 0,7489x + 0,3534 R² = 0,719 7 China Germany % global GDP 6 5 France 4 United Kingdom Italy 3 Russia 2 Spain Canada India Mexico Turkey 1 Brazil South Korea Australia Netherlands Sweden 0 0 1 2 3 4 5 6 7 8 9 % top 500 universities Strong Correlation (2009 Data): National GDP and University Rankings http://www.upload-it.fr/files/1513639149/graph.html 26 IBM UP (University Programs) WW © 2010 IBM Corporation Accelerating Innovation: Create Ideal or Reference Models UNIVERSITIES: Research Centers & Real-World Systems 27 IBM UP (University Programs) WW CITIES/METRO REGIONS: Universities Key to Long-Term Economic Development © 2010 IBM Corporation Edu-Impact.Com “When we combined the impact of Harvard’s direct spending on payroll, purchasing and construction – the indirect impact of University spending – and the direct and indirect impact of off-campus spending by Harvard students – we can estimate that Harvard directly and indirectly accounted for nearly $4.8 billion in economic activity in the Boston area in fiscal year 2008, and more than 44,000 jobs.” 28 IBM UP (University Programs) WW © 2010 IBM Corporation Urban-Age.Net Currently, the world’s top 30 cities generate 80% of the world’s wealth. The Urban Age For the first time in history more than 50% the earth’s population live in cities - by 2050 it will be 75% The Endless City 29 IBM UP (University Programs) WW © 2010 IBM Corporation Population growth per hour in major cities 30 IBM UP (University Programs) WW © 2010 IBM Corporation World Population & Service System Scaling 31 IBM UP (University Programs) WW © 2010 IBM Corporation Thank-You! Questions? “Instrumented, Interconnected, Intelligent – Let’s build a Smarter Planet.” – IBM “If we are going to build a smarter planet, let’s start by building smarter cities” – CityForward.org “Universities are major employers in cities and key to urban sustainability.” – Coalition of USU “Cities learning from cities learning from cities.” – Fundacion Metropoli “The future is already here… It is just not evenly distributed.” – Gibson “The best way to predict the future is to create it/invent it.” – Moliere/Kay “Real-world problems may not/refuse to respect discipline boundaries.” – Popper/Spohrer “Today’s problems may come from yesterday’s solutions.” – Senge “History is a race between education and catastrophe.” – H.G. Wells “The future is born in universities.” – Kurilov “Think global, act local.” – Geddes Dr. James (“Jim”) C. Spohrer Director, IBM University Programs (IBM UP) WW spohrer@us.ibm.com 32 IBM UP (University Programs) WW © 2010 IBM Corporation Vision for the Educational Continuum TECHNOLOGY IMMERSION Primary School Any Device Learning Secondary School PERSONAL LEARNING PATHS Student-Centered Processes Higher Education Continuing Education KNOWLEDGE SKILLS Learning Communities Intelligent Services Specialization Instrumented • Student-centric • Integrated Assessment Systemic View of Education The Educational Continuum • Aligned Data • Outcomes Insight GLOBAL INTEGRATION ECONOMIC ALIGNMENT Workforce Skills Economic Sustainability Interconnected • Shared Services • Interoperable Processes http://www-935.ibm.com/services/us/gbs/bus/html/education-for-a-smarter-planet.html 33 33 IBM UP (University Programs) WW © 2010 IBM Corporation Fun: Learn CityInvesting with CityOne Game Serious Game to teach problem solving for real issues in key industries, helping companies to learn how to work smarter. Energy, Water, Banking, Retail http://www.ibm.com/cityone 34 IBM UP (University Programs) WW © 2010 IBM Corporation Priority 1: Urban Sustainability & Service Innovation Centers A. Research: Holistic Modeling & Analytics of Service Systems Modeling and simulating cities will push state-of-the-art capabilities for planning interventions in complex system of service systems Includes maturity models of cities, their analytics capabilities, and city-university interactions Provides an interdisciplinary integration point for many other university research centers that study one specialized type of system Real-world data and advanced analytic tools are increasingly available B. Education: STEM (Science Tech Engineering Math) Pipeline & LLL City simulation and intervention planning tools can engage high school students and build STEM skills of the human-made world (service systems) Role-playing games can prepare students for real-world projects LLL = Life Long Learning C. Entrepreneurship: Job Creation City modeling and intervention planning tools can engage university students and build entrepreneurial skills Grand challenge competitions can lead to new enterprises 35 IBM UP (University Programs) WW © 2010 IBM Corporation Teaching SSME+D Fitzsimmons & Fitzsimmons – – Graduate Students Schools of Engineering & Businesses Service Management: Operations, Strategy, and Information Technology By Fitzsimmons and Fitzsimmons, UTexas Teboul – – – Undergraduates Schools of Business & Social Sciences Busy execs (4 hour read) Ricketts – – Practitioners Manufacturers In Transition And 200 other books… – URL: Zeithaml, Bitner, Gremler; Gronross, Chase, Jacobs, Aquilano; Davis, Heineke; Heskett, Sasser, Schlesingher; Sampson; Lovelock, Wirtz, Chew; Alter; Baldwin, Clark; Beinhocker; Berry; Bryson, Daniels, Warf; Checkland, Holwell; Cooper,Edgett; Hopp, Spearman; Womack, Jones; Johnston; Heizer, Render; Milgrom, Roberts; Norman; Pine, Gilmore; Sterman; Weinberg; Woods, Degramo; Wooldridge; Wright; etc. http://www.cob.sjsu.edu/ssme/refmenu.asp Service Is Front Stage: Positioning services for value advantage By James Teboul, INSEAD Reaching the Goal: How Managers Improve a Services Business Using Goldratt’s Theory of Constraints By John Ricketts, IBM 36 IBM UP (University Programs) WW © 2010 IBM Corporation Service-dominant logic Service is the application of competences for the benefit of another entity Service is exchanged for service Value is always co-created (“Firm”) Goods are appliances for delivery All economies are service economies All businesses are service businesses 37 Resource Integrator/ Beneficiary Vargo, S. L. & Lusch, R. F. (2004). Evolving to a new dominant logic for marketing. Journal of Marketing, 68, 1 – 17. Resource Integrator/ Beneficiary (“Customer”) © 2010 IBM Corporation © 2005 IBM Corporation What is value? Value depends on the capabilities a system has to survive and create beneficial change in its environment. Taking advantage of the service another system offers means incorporating improved capabilities. Value can be defined as system improvement in an environment. All ways that systems work together to improve or enhance one another’s capabilities can be seen as being value creating. 38 Vargo, S. L., Maglio, P. P., and Akaka, M. A. (2008). On value and value co-creation: A service systems and service logic perspective. European Management Journal, 26(3), 145-152. © 2010 IBM Corporation © 2005 IBM Corporation What is a service system? Forms of Service Relationship (A & B co-create value) A. Service Provider Service involves at least two entities applying competences and making use of individual and shared resources for mutual benefit. We call such interacting entities service systems. B. Service Client • Individual • Organization • Public or Private • Individual • Organization • Public or Private Forms of Service Interventions (A on C, B on C) Forms of Responsibility Relationship (A on C) Forms of Ownership Relationship (B on C) C. Service Target: The reality to be transformed or operated on by A, for the sake of B • • • • People, dimensions of Business, dimensions of Products, goods and material systems Information, codified knowledge Gadrey, J. (2002). The misuse of productivity concepts in services: Lessons from a comparison between France and the United States. In J. Gadrey & F. Gallouj (Eds). Productivity, Innovation, and Knowledge in Services: New Economic and Socio-economic Approaches. Cheltenham UK: Edward Elgar, pp. 26 – 53. 39 Spohrer, J., Maglio, P. P., Bailey, J. & Gruhl, D. (2007). Steps toward a science of service systems. Computer, 40, 71-77. © 2010 IBM Corporation © 2005 IBM Corporation Resources are the building blocks of service systems First foundational premise of service science Physical Rights No-Rights 1. People 2. Technology 3. Organizations 4.. Shared Information Service system entities dynamically configure four types of resources Not-Physical The named resource is Physical or Not-Physical (physicists resolve disputes) The named resource has Rights or No-Rights (judges resolve disputes within their jurisdictions) 40 Formal service systems can contract Informal service systems can promise/commit Trends & Countertrends (Evolve and Balance): Informal <> Formal Social <> Economic Political <> Legal Routine Cognitive Labor <> Computation Routine Physical Labor <> Technology Transportation (Atoms) <> Communication (Bits) Qualitative (Tacit) <> Quantitative (Explicit) Spohrer, J & Maglio, P. P. (2009) Service Science: Toward a Smarter Planet. In Introduction to Service Engineering. Editors Karwowski & Salvendy. Wiley. Hoboken, NJ.. © 2010 IBM Corporation © 2005 IBM Corporation Value propositions are the building blocks of service system networks Second foundational premise of service science Service system entities calculate value from multiple stakeholder perspectives A value propositions can be viewed as a request from one service system to another to run an algorithm (the value proposition) from the perspectives of multiple stakeholders according to culturally determined value principles. The four primary stakeholder perspectives are: customer, provider, authority, and competitor 41 Value propositions coordinate & motivate resource access Stakeholder Perspective (the players) Measure Impacted Pricing Decision Basic Questions Value Proposition Reasoning 1.Customer Quality (Revenue) Value Based Should we? (offer it) Model of customer: Do customers want it? Is there a market? How large? Growth rate? 2.Provider Productivity (Profit) Cost Plus Can we? (deliver it) Model of self: Does it play to our strengths? Can we deliver it profitably to customers? Can we continue to improve? 3.Authority Compliance (Taxes and Fines) Regulated May we? (offer and deliver it) Model of authority: Is it legal? Does it compromise our integrity in any way? Does it create a moral hazard? 4.Competitor (Substitute) Sustainable Innovation (Market share) Strategic Will we? (invest to make it so) Model of competitor: Does it put us ahead? Can we stay ahead? Does it differentiate us from the competition? Spohrer, J & Maglio, P. P. (2009) Service Science: Toward a Smarter Planet. In Introduction to Service Engineering. Editors Karwowski & Salvendy. Wiley. Hoboken, NJ.. © 2010 IBM Corporation © 2005 IBM Corporation Access rights are the building blocks of service system ecology Third foundational premise Competitor of service science S Service system entities reconfigure access rights to resources by mutually agreed to value propositions (substitute) Provider Customer Authority P C A OO LC OO LC SA PA SA PA value-proposition change-experience dynamic-configurations 42 Access to resources that are owned outright (i.e., property) Access to resource that are leased/contracted for (i.e., rental car, home ownership via mortgage, insurance policies, etc.) Shared access (i.e., roads, web information, air, etc.) Privileged access (i.e., personal thoughts, inalienable kinship relationships, etc.) time Access rights service = value-cocreation provider resources Owned Outright Leased/Contract Shared Access Privileged Access B2B B2C B2G G2C G2B G2G C2C C2B C2G *** customer resources Spohrer, J & Maglio, P. P. (2009) Service Science: Toward a Smarter Planet. In Introduction to Service Engineering. Editors Karwowski & Salvendy. Wiley. Hoboken, NJ.. Owned Outright Leased/Contract Shared Access Privileged Access © 2010 IBM Corporation © 2005 IBM Corporation Premises of service science: What service systems do Rights 1. People 2. Technology 3. Organizations 4.. Shared Information Physical Not-Physical No-Rights Stakeholder Perspective Measure Impacted Pricing Questions Reasoning 1.Customer Quality Value Based Should we? Model of customer: Do customers want it? 2.Provider Productivity Cost Plus Can we? Model of self: Does it play to our strengths? 3.Authority Compliance Regulated May we? Model of authority: Is it legal? 4.Competitor Sustainable Innovation Strategic Will we? Model of competitor: Does it put us ahead? S 43 P C A Service system entities dynamically configure (transform) four types of resources Service system entities calculate value from multiple stakeholder perspectives Service system entities reconfigure access rights to resources by mutually agreed to value propositions Spohrer, J & Maglio, P. P. (2009) Service Science: Toward a Smarter Planet. In Introduction to Service Engineering. Editors Karwowski & Salvendy. Wiley. Hoboken, NJ.. © 2010 IBM Corporation © 2005 IBM Corporation